Ep758: Eric Simonson – Not All Real Estate Investments Are Made Equal

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to winning investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And I want to thank you for joining that mission today. And I want to especially thank the listeners in Houston, Texas for listening in and learning how to reduce your risk. Fellow risk takers this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guest, Eric Simonson, Eric, are you ready to join the mission?

Eric Simonson 00:43
I assure him Yeah.

Andrew Stotz 00:46
Let me introduce you to the audience and let them get to know your mission. Eric is the founder and CEO of a bundle a financial planning firm that teaches and empowers people to take action and own their financial lives. After working as a traditional advisor for over a decade, Eric saw a need to help people who couldn't work with traditional advisors since most required having a certain amount of money to invest with them. First, he left his corporate job and launched a different model, one where he was only paid for giving honest advice that benefited his clients, not him. He built a bundle around a flat fee and advice on the financial planning model eliminating all conflicts of interest without overcharging for professional advice. And using proven low cost investments. His firm now guides over 450 clients in all areas of their financial lives. Eric, take a minute and tell us about the unique value that you are bringing to this wonderful world. Well, thank you, Andrew,

Eric Simonson 01:48
thank you for having me. I am a little disappointed. You didn't say I'd like to introduce my worst podcast guests ever. That would have been, that would have been a new one for me. But I did love the intro. Yeah, a unique value that I bring to the world is I'm trying to help as many people as I possibly can, I think there's a drastic need out in the world for good, honest advice. I think with the rise of social media with just so much noise out there, people are hearing bad investment, bad advice, left and right. And if they want to hire a professional, oftentimes, that professional is not going to work with them. Because as you mentioned, they just don't have enough money, or maybe their fees are too high. There's some barrier to entry. And so what we're trying to do here at a bundo is make that cost as low as possible, not have any barriers to entry, and try to help as many people as we can to hopefully change the world for better.

Andrew Stotz 02:47
That's what we want a better world. Now, let me ask you this, let's talk about like the ideal client, from your perspective, is it a doctor, an engineer, a what type of person is the type of person that will come to you?

Eric Simonson 03:00
Yeah, well, because we don't, we don't have any sort of, again, barriers to entry, and we charge everybody the exact same fee. You know, we don't have that traditional like, a client B, client, C client, anybody that comes in our door is going to be treated with the same level of care and, and get the same high quality advice. So I wouldn't say we have necessarily an ideal client, I think the type of client that we maybe helped the most, or we we most enjoy helping, are really the kind of mid 30s they're balancing, you know, a new career, they've got a kid, maybe another kid on the way they've got a lot of goals. That's somebody who we find ourselves really gravitating towards helping. So if I had to, you know, tell you who the exact ideal client is, that's, that's what I would say. And

Andrew Stotz 03:51
maybe you can just give a brief description of if someone comes to you, and they, they, they pay and they get your service. What is the outcome of that look like for them?

Eric Simonson 04:03
Yeah, I mean, can I say that their life has changed forever. I mean, they're what the outcome hopefully is, right? Is they're gonna get advice, it's gonna help them align their values, align their goals with their actions. So they're going to everything's gonna be a little different based on that person, but they might, you know, get on a budget, right? We'll help them figure out how much you spend in each category. They're gonna get probably a better optimize savings plan. So you know, they're going to save into maybe a slightly different buckets to better optimize taxes or their returns. They're going to have maybe a better medical plan option that they choose through work. I could go on and on and on, but again, anything in their financial life, we want to dig into and help them optimize.

Andrew Stotz 04:51
And when I think about that, one of the things that turns me off as a business because I've looked at this and I do some stuff, but mainly I'm working with institutions is that everybody's situation is different. And, okay, so there's one way to run this business to say, Yeah, everybody's different. But come on, you're gonna have investing needs and medical needs and insurance needs. And therefore, we kind of understand what are some great options there? And we're going to kind of slot you in, or, you know, how do you handle the differences with people? Because obviously, with a flat fee, it can't be that you tend to spend 1000 hours working on the complex situation of one Yeah, yeah,

Eric Simonson 05:37
no, thank you for bringing that up. That's actually something that, you know, despite being interviewed, you know, many times, that's something that has never been asked. And that's a very valid question. Somebody we think about a lot. You know, I think the short answer is, you know, we do if we're running into a situation where somebody just has complexity, or they have something going on that we don't feel like we're the right people to to take on, we're very honest with them, and letting them know that sorry, we just probably can't help you, as well as maybe this person over here could. So from time to time, we're absolutely referring people to a better solution. But for the majority, right, of the people that come in our door, one, I would say that, yes, everybody's different. And everybody's complex, but in different ways. So you know, somebody might have a lot of debt, and a lot of student loans, right. And the hard challenge with them is just helping them work through how to pay these down in the best way possible, right. And so that's work. That's time. But that's that person. In particular, another person might be just retired, right? And they want help with retirement income. So figuring out should I pull money from my 401k? Should I pull money from my HSA? When should I start Social Security? When should I start Medicare? That's another level of complexity. And in my opinion, it's not more complex, it's just different, right? And so we're not, you know, interesting enough, we're not spending that much more time. With certain groups of people, we're just spending the time differently. And so we have, you know, we found as we've been doing this now for four years, and worked with hundreds and hundreds of people, that it, the needs of people are all different, but the time we spend kind of helping them on those needs, is more or less similar. And we also have a really fantastic team with cash advisors that have different breadth of skills. You know, we've got some advisors who are really good with like estate planning, tax planning, right, so we can lean on them. We've got other advisors who are just retirement experts, right, who have written books about retirement, and so we can lean on them when it comes to different strategies. So, you know, through kind of our collective intelligence, we feel like, we're able to help a wide swath of people, and in a really good way.

Andrew Stotz 07:59
So after advising 450, people, you must have made a couple of observations. I mean, it's a very unique group, it's a group of people that are reaching out and looking for help and looking for answers. So it may not be representative of the typical person. But I'm just curious, you know, if you've made a couple of observations from what you see, now, after getting a 450

Eric Simonson 08:23
crash, you know, that's, that's funny, you asked that, because I was just thinking earlier this week, I was thinking, you know, we're starting to get some interesting data, because of the amount of people we work with. And, you know, as we continue to grow and expand, you know, we're gonna Yeah, we're definitely gonna have some insight into kind of the psyche of the consumer. And, and I will say that, yeah, we've definitely learned some things, seen some things, and probably the biggest, in my opinion, surprising, but it might not be surprising for you and a lot of your listeners. But the biggest surprising thing that I we continue to see over and over is people's fear, and specifically their fear around investing. And, you know, everybody thinks the recession is coming, everybody thinks the markets gonna crash, you know, and last I checked, the market was up 23% This year, you know, so it's, it's, it's it, there's kind of a disconnect between what's happening with the markets and with people's retirement accounts, and the way people feel about it. And so we're, you know, we're trying to educate them and show them, you know, what the risk, you know, in your world, right, with the right risk, appropriate level of investment to take on this.

Andrew Stotz 09:33
So if somebody's interested in they want to learn more, what's the best place to go?

Eric Simonson 09:39
If somebody wants to learn more, yeah, yeah, I mean, they can visit us on any of our social media platforms. Best place would probably be our website. We've got a lot of good content on there, they can schedule a free consultation with us to learn more. That would be probably the best, best place to learn more about Ubuntu and what we're doing. Yeah,

Andrew Stotz 09:59
so I'll have a link to that in the show notes abunda wealth.com. So that's great. It's interesting to learn about what you're doing. And I wish you, you know, great success, because, you know, you really are changing lives and helping people I know, it was a major milestone in my mother and father's life, many years ago, when they found an advisor, it wasn't a fee only and it wasn't what you're doing in that way. But I can say that they've had that advisor all their life. And that advisor has taken great care of them. And he was able to identify that they were way overexposed to a particular stock that my you know, at the company My dad worked for, and was able to bring that down before that stock collapsed. And it's great, you know, yeah, so much value there. So I appreciate that. Well, now it's time to share your worst investment. And since it no one goes into their worst investment, thinking it will be tell us a bit about the circumstances leading up to an Intel is your story. Yeah,

Eric Simonson 11:04
well, I, you know, as, as somebody who dispenses financial advice for a living to hundreds of people, you know, this was, this was something that I definitely had to check my ego at the door. I'll tell you the story. So in 2020, during kind of the early days of COVID, my wife and I sold a home, and we bought a condo, because we want to live, we want to live downtown, and we were probably one of the only people in the country to actually lose money on a property that we bought in 2020, that we sold in 2023. Somehow, we lost about 10% on that, on that home purchase. When everybody else, you know, double basically their home value doubled. And, and so that was I would say that was probably, you know, dollars and cents wise, my worst investment ever. And what it taught me is that the, you know, the A, the condo market behaves a little differently than the single family home market. And also, downtown markets obviously, can behave differently than you know, then suburban markets. And so I had made money on every property before that. But that was one where I, it didn't go the way I planned, I thought I thought everything was going to keep going up. And that did except where I left. And so that was my worst investment ever. And I would say that's a cautionary tale to folks that you know, not all homes, and not all real estate investments are made equal, right, you got to really focus on location, got to focus on, you know, build quality. You know, if condos just in general don't appreciate as much I learned because, you know, you got apartments coming in left and right, that are they're creating competition for those. So purchase 2020.

Andrew Stotz 13:03
And do you remember the day that that you, you know that that sale was completed? Like, you know, normally you and your wife would probably clink champagne glasses, but instead you realize, okay, that was different? You remember that? Yeah, well,

Eric Simonson 13:17
I knew, I mean, I knew eight months before we sold that we were going to take a loss on it. And you know it understanding investment risks, right? In viewing it in the context of any other investment, right, if I would have owned it index fund and what have dropped 10% in value, it's not the end of the world, right? But when you think of it, as you know, as a property as a home in this asset, when all the other homes went up, and then yours goes down. That was a challenge. So I knew that we're gonna take a loss. But I was still super relieved when we actually did and we were able to get out from under it, as I'm sure you hear quite often. You know, that was a lesson. And you know, the next property, you know, we aren't going to make those same mistakes.

Andrew Stotz 14:12
Yeah. So let's just wrap this up by going through, you know, what would you describe as the lessons that you learned?

Eric Simonson 14:19
Yeah, lessons that I learned are Don't be cautious on new builds. Okay, you know, kind of like a new car. I've learned that new builds are, you know, are have a little bit of a markup on them. And you know, because you get to be the first owner, and that's all fun, and that's great. But it's harder for those to see that appreciation. Because you're going to have a little bit of that, at least in my perspective, kind of first owner depreciation. So that was my lesson. And I've shared that with clients, right. Just be cautious of new builds. Don't expect to immediately flip that into a profit. That was the first lesson. Second lesson was, you know, we had already bought after the, after the downtown markets were starting to really soften. Because of COVID. You know, we knew I COVID it was there, we knew that downtown's were closed. But I thought that was going to be baked in. And I was, you know, and I was really factoring on a return back to work and downtown reopening. And, you know, took three years, and it never happened, and it still hasn't happened. And so, you know, I think, don't bet on a recovery. You know, if, if, if there's another kind of big macro event, it's hard to, it's hard to accurately guess what's going to happen, you know, I would have never guessed used cars would have gone up in value. And, you know, there's weird things that happened during COVID. That I think it's just hard to protect. Yeah,

Andrew Stotz 15:57
yeah. One of my takeaways, you know, you said something about, you know, condos not appreciating the way sometimes that people think Bangkok's an interesting case, because there's so many condos that have been built in the last 15 years, and you know, many that are coming up. And you know, we have a very intricate SkyTrain in subway network. Now, that goes out throughout the greater Bangkok area. And so there's constantly new things coming up along that subway line, I saw a condo that I thought was interesting near my home, and I thought, I'll buy it and I bought it. It hadn't been built, it was being built. And the company that was building it was, you know, a high quality company. So I wasn't too worried about that. But when I finally received it, I just thought to myself, I don't really feel like living in this for some reason. And I tried renting it for a little bit. And then after that, I sold it. And so I didn't have it for very long. And I probably made all in all, because I had some renters in there for a little while, I probably made one or 2%, you know, over a year, or maybe over the whole time I had it, which was maybe two or three years. And I was fine with walking away from that, because I didn't want to live in it. Number one. And then also, I didn't want to be a landlord. But the thing that I've come to see in Thailand in particular is that I think a lot of people have a hope that they're going to get some big gain at the end of you know, you know, in future years when they sell it. And I think it's just the opposite. They're gonna have a loss. And that's coming because of new developments that are coming up all the time. And also you have deterioration ultimately in the building and the look and the style and all that. And so what ends up happening is what people think is is it going to be a gain is actually a loss. And the second thing that I find fascinating is that nowadays, you can't even sell secondhand condoms. Very hard. Yeah,

Eric Simonson 17:57
yeah. Much more. Yeah, we had one showing, and we're thankful that that person actually bought it. Yeah, that was lucky, you know, our neighbors have been on the market for months and months and months and not sold. Yeah, it's a much, much smaller pool of buyers. And everything you're saying is correct. And, you know, homeownership just as a whole, right, you have these costs that people also don't often think about, you know, I need a new, there's an assessment right there on the property, or I need a new roof, or I need to repair the carpet, or I need, you know, just all these expenses that come up. And so, yeah, people have this idea in their mind of real estate is this, it's almost as guaranteed investment. And when you really add it up, and you've in you, you factor in your transactional costs to buy and sell it. Now your mortgage costs and your realtor fees and the title fees. And, you know, you have to have to go up five 10% a year just to break even, and some of those costs.

Andrew Stotz 18:59
And that's not the same with a single detached house where you have a piece of land and you have a house and you know, that type of thing. So it's just a very, you know, different situation in the condo market. So, before we move on to the next question, we had a little discussion before and my valuation masterclass bootcamp, students are graduating this particular week, and from a six week intensive program of how to value companies. And one of the companies that they're valuing one of the teams is valuing is Tesla. And I just asked you a random question before we turn on the mic is Do you own a Tesla?

Eric Simonson 19:38
And the answer I said, Yes, it's absolutely yes. So maybe in confidence, yeah, for almost eight

Andrew Stotz 19:42
years for the benefit of my students. Maybe you could give a quick synopsis as a long term owner, you know, what your perspective is on the company in the car, and all that as they're, you know, coming up with their final, you know, presentations.

Eric Simonson 19:57
Yeah, I'm happy to do that. And I will say if I were on CNBC right now there would be a disclaimer that says, you know, speaker does own own stock and Tesla, right. So I have a conflict here. As I as I say this I was ladies and

Andrew Stotz 20:13
gentlemen, the speaker does own stock in Tesla. So take it with a grain of salt. This is not investment advice, but it is personal experience, ladies and gentlemen, that's our advice for you. So tell us more perfect,

Eric Simonson 20:28
yes, I was fortunate to have some play money in 2015, I bought Tesla stock. And that's worked out? Well. I am a huge, so I'm a huge, huge fan of Tesla, I think that, you know, the, from a quality of build standpoint, I mean, my vehicle has been flawless. I've needed new tires. Apart from that I haven't had to do a thing. I mean, I literally haven't edited a thing, they rotate the title, they put in windshield wiper fluid. And that's all that's happened over this, you know, eight year period. You know, the car has gotten better, since the day I bought it. You know, I get like, I could I could probably spend an hour telling you all the improvements that have happened. While I've owned the car. I could sell the car, probably today for not that less than I bought it for. You know, when you consider the tax credit I got, you know, really the cost of ownership has been so low. What I'm trying to say the electric electricity, the charge it is super cheap. You know, it's laid out.

Andrew Stotz 21:41
For a person that doesn't know anything like myself. How do you charge it? Where do you charge it? When do you charge it?

Eric Simonson 21:48
So I've always charged it basically through and like an Off Peak charging program. So in our current building, we've got a charger, previous condo, we installed a charger, our previous home and a charger, but all of them are on you charge overnight. So you're getting favorable rates from the electric company. And that means that

Andrew Stotz 22:11
you're plugging in when you park at the end of the day you plug in and then it turns on at night or what does that mean?

Eric Simonson 22:17
Yeah, not not every day. But, you know, for most people, it's probably once every four to five days. You get home, you plug it in you, you go upstairs, you make dinner, you go to bed, you wake up in the morning, you go to your car, you unplug it, and you go for your day. I mean, I'm you know, I used to live in Minnesota, and I used to freeze my butt filling up the car with gas, and then went to her and never had to do that again after 2015. And yeah, I mean, electricity is cheap, we have a really good setup here where we're only paying about $8 to fill up our car, you know, from zero to 300 miles, you know about eight bucks. So it's really, really cheap. Yeah, I, you know, where Tesla isn't as good is the, you know, the I would say like the fit and finishes are not as high end for that type of for that expensive of a car. You know, people have had issues, you know, sometimes like panel gaps and just little things like that. But that's never been an issue for me, it's never bothered me. And I think that, you know, Tesla is separate from just the car company, right? They're doing some exciting things with energy and with energy storage. And so I think that there's actually quite a bit of potential in the business. On that side of things when you look at like, you know, energy, energy storage, driverless technology. I'm very excited about that. I think that the car business is you know, could become second fiddle someday to that.

Andrew Stotz 23:53
One thing is interesting about China is that they really are nurturing their Evie companies and tax credits as much as possible incentivizing them and all that. But there's one car company in America that the administration seems to not like. And I just curious, like what I mean when I look at the company that needs to be encouraged more than any Tesla is probably the most innovative and pushing the limits on everything. I just found that fascinating and you see the GM and Ford and others you know struggling struggling to try to figure out how to change the business model

Eric Simonson 24:32
Yeah, yeah. I've never seen you know, a Tesla commercial. I've never you know, they've been all grassroots. It's all been people like me who have just told everybody they can like this is a great car. I yeah, I am is one of the you know, if this was my best investment ever podcast, I would say you know, that was probably one of one of them was buying the stock and the car? Yeah, yep. Yeah. Well, I will say, though that, you know, the counter argument to the, you know, the Tesla investment thesis is, you know, those automakers in China are, you know, used to be Tesla was the Evie in China. And now, you know, not people are buying, you know, Lee and they're buying, you know, all the other ones. And so Tesla's market share of China has gone way down. And so that's definitely a headwind. You know, Elon with his you know, with Twitter X thing is a headwind. Right. So there's, there's no, there's some things that that can cause paths to.

Andrew Stotz 25:40
Yeah, I just put a poll on my LinkedIn should, Tesla by Twitter. And the vote was about 60%. No. So interesting. Yeah. But I mean, I had some interesting comments, and you know, people thinking about how that could, you know, come together. But it's fascinating. And I appreciate you sharing a little bit about that. I know, my students are going to appreciate hearing that. So let's go back. And think about your investment. And let's think about your worst investment, based on what you learned from that story and what you continue to learn. Let's now imagine a young man or woman or a couple who are looking at a condo, what one action would you recommend that they take to avoid suffering the same fate?

Eric Simonson 26:28
I would tell them to make sure they feel really confident in their timeline that they're going to live there. Because your experience was, you didn't you decided you actually didn't want to live there. My experience was, I only lived there for a couple of years. If you know, if I would have held that longer, I probably would have done slightly better, maybe, I don't know. So first thing I would say is really be you know, be confident in the, you're gonna live there long enough to just recoup maybe some of those initial costs of by second thing would be don't, don't spend more on this condo purchase, than you're really comfortable spending, like, some people will buy, you know, they'll buy a single family home and they'll go above budget, you know, to duck into bidding war, they'll buy the house, I would say with a condo, because it's it's going to be a bit more of a risk. I just would hate for somebody to you know, maybe their budget was 500,000, and then a buying something for 600. And then that and that goes down in value, it just becomes a bigger loss for them. So just really, you know, be tighter on your, on your purchase price parameters with a condo purchase. And then I would say also really understand the rules around the rentability of it. So what happens if you want to get out of it? Can you rent it out? Like you did? In our instance? We couldn't. We knew that going into it. But that was just a definitely an issue. Right? We couldn't have held on to it even if we wanted to. So just really understand, you know, the those bylaws

Andrew Stotz 28:10
really advice? What's a resource of either yours or any others that you'd recommend for the listeners?

Eric Simonson 28:16
Yeah, you know, if I want to direct people, again, to our website, I they can specifically go to our blog, we've got a lot of really good content we're putting out on our blog on a consistent basis. One of our advisors is a prominent blog poster or Blogger, I should say. And so he's actually writing blog content for us as well. And so we've Yeah, we've got some good, good material on there as well as a lot more common.

Andrew Stotz 28:45
Yeah, and I'm looking at some of them, like, What to Consider When combining finances, why do bond funds lose value if they are safe as another example? Lots of lots of good blogs right there. So yeah, good resource. Let me ask you. Last question. What is your number one goal for the next 12 months?

Eric Simonson 29:03
My number one goal for the next 12 months, I will tell you, my number one goal for the next 12 months is creating the best culture and team that I can create. You know, because if I do that, they're gonna work hard for their clients. They're gonna serve them really well. So I want to just, I want to make I wanna have a happy, hard working group of folks out of Bondo

Andrew Stotz 29:27
beautiful. All right, listeners. There you have it another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude, Eric, I want to thank you again for joining our mission and on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Eric Simonson 29:55
No other than just thank you for having me under appreciate it.

Andrew Stotz 29:57
It's great having you and learning from You know, I appreciate you coming on the show and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today we added one more person to our mission to help 1 million people reduce risk in their lives. This is your words podcast host Andrew Stotz sang. I'll see you on the upside.